Embodiments of the present invention relate to performance analysis, and in particular to systems and methods configured to manage Operational Leading Indicators (OLIs).
Unless otherwise indicated herein, the approaches described in this section are not prior art to the claims in this application and are not admitted to be prior art by inclusion in this section.
Traditionally, businesses measure performance as cost (i.e., an output of operational processes). While this approach provides an adequate picture of historic performance of a business unit over a defined period of time, cost as output measure gives little insight into future performance or root causes of process variance.
By contrast, Operational Leading Indicators (OLIs) are forward-looking measures of performance that complement traditional cost-based views of business performance. OLIs provide line managers with insight into the state of operations. OLIs can also explain business performance in terms of concrete operational factors.
OLIs remedy the shortcomings of cost-based metrics by focusing on identifying, selecting, defining, and implementing data that gives insight into future cost impact before it becomes apparent in the cost view. In particular, OLIs are indicators of operational efficiency and complement traditional (e.g., financial) views of performance.
Thus while financial metrics such as Return on Equity (RoE) have long been used to measure business performance, OLIs complement financial views of business performance by highlighting areas of operational inefficiency. This can prompt process redesign before issues become apparent in finance (a lagging indicator).
While the concept of OLI has been studied and discussed at length, little guidance exists on how OLIs can be realized in the information systems of a business entity. Conventional attempts at manual data collection and lack of predictive insight can lead to OLI projects and initiatives that are incomplete and/or do not return the investment made.
Accordingly, the present disclosure addresses these and other issues with systems and methods configured to manage OLIs.